President Bush is defending his decision to exclude some countries from lucrative U.S. financed reconstruction projects in Iraq, saying only nations that contributed troops to the war that toppled Saddam Hussein are entitled to bid on such work.

Anger in Europe over the U.S. decision to exclude countries, including France, Germany and Russia, from billions of dollars worth of Iraqi reconstruction contracts is not going away. Thursday, the European Union called the move unjustified and difficult to accept.

"It does seem gratuitous and unnecessary," said Anthony Gooch, a spokesman for the EU's delegation in Washington. He denounced the move as puzzling, especially since it comes at a time when President Bush has been telephoning the leaders of European nations asking for their help in forgiving Iraqi debt.

"On a day when you see President Bush seeking the active support of three heads of government from Russia, Germany and France to help restructure Iraq's debt, that while the left hand is doing one thing while the right hand is doing something else, it does suggest a certain incoherence," he continued.

But the president, in his first public comments about the dispute, defended the decision in an exchange with reporters.

"Our people risked their lives," defended Mr. Bush. "Friendly coalition folks risked their lives and therefore the contracting is going to reflect that and that's what the U.S. taxpayers expect."

But critics including Rania Masri of the anti-war group called the "Campaign to Stop War Profiteers" question whether this is really the best way to use American taxpayer money.

"If the objective of spending this money is to make sure Iraq is rebuilt in the best way possible, then the contracts should be given to the companies that are most effective and efficient in doing that and I think that would be the greatest award for taxpayer money," said Ms. Masri.

European anger over the U.S. decision to shut some U.S. allies out of lucrative Iraqi reconstruction contracts comes at a sensitive time for the Bush administration. At the request of the president, former U.S. Secretary of State James Baker will travel next week to some of the European capitals that opposed the Iraq war to ask them to forgive billions of dollars in Iraqi debt.

But a White House spokesman says the administration has no intention of changing its policy, which is rooted in the trans-Atlantic rift that surfaced when some European nations blocked United Nations approval of the war. Still, the European Union is looking into whether this U.S. decision, which it says threatens to re-open trans-Atlantic wounds, violates rules governing world trade.